AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
On Wednesday, the Federal Reserve maintained its interest rates at their current level, in line with market expectations. However, during the subsequent press conference, Federal Reserve Chairman Jerome Powell hinted at a potential rate cut in September. This news caused a sharp decline in the dollar and U.S. Treasury yields, while U.S. stocks and precious metals soared. In addition to the stimuli from rate cut expectations, the escalating geopolitical turmoil in the Middle East also spurred safe-haven demand for gold and silver.
By the close, gold prices had risen by 1.73% to $2,494.30 per ounce, and silver prices had increased by 1.96% to $29.09. After a two-week consecutive pullback, gold prices began to rise early this week and could potentially resume an upward trend.
Although Powell stated that the Federal Reserve has not made any decisions regarding future policy meetings (including the September meeting), there is a broad consensus within the committee that the economy is progressing towards a direction that might warrant a lowering of policy rates. He mentioned that the decision to cut rates would depend on whether inflation decreases or meets expectations, economic growth remains reasonably strong, and the labor market continues at its current level. If these conditions are met, he believes there is a possibility of a rate cut in September.
Additionally, after a Hamas leader was assassinated in Iran, Iranian leaders ordered direct attacks on Israel, further heightening geopolitical concerns and increasing safe-haven demand for gold. Capital.com market analyst Kyle Rodda stated that due to developments in the Middle East situation, the safe-haven demand for gold has increased. Historically, investors have viewed investing in precious metals as a safe option amid geopolitical tensions.
However, the positive impact of the Federal Reserve’s rate decision has largely been digested by the market, so attention must be paid to potential profit-taking by bulls and the possibility of a “sell the news” scenario. Nonetheless, the geopolitical situation is likely to continue supporting gold prices, potentially limiting short-term downside for gold prices.
On Wednesday, the Bank of Japan raised its main rate from zero to 0.25% and stated that it would halve its government bond purchases. With both rate hikes and balance sheet reductions in play, the yen rose against the dollar. Furthermore, Japan’s tightening of monetary policy, combined with the Federal Reserve’s rate cut expectations, has caused a reversal in global investment flows, including so-called “carry” trades.
From a technical analysis perspective, December gold bulls have the short-term technical advantage. The bulls’ next upward price objective is to close above the resistance level of $2,537.70, while the bears’ next short-term downside price objective is to close below the technical support level of $2,350.00. The first resistance level is today’s high of $2,474.30, followed by $2,481.10. The first support level is the overnight low of $2,449.20, followed by $2,425.00.
